Keppel Profit Falls As Rig Business Falters

SINGAPORE, July 23 (Reuters) – Singapore-based conglomerate Keppel Corp Ltd’s second-quarter net profit fell 2 percent to S$396.7 million ($290.2 million) from a year earlier, weighed down by weak performance in the offshore and marine unit.

Keppel, one of the world’s largest offshore rig builders, also has business interest in real estate and infrastructure. The weakness in oil market over the past year has been weighing on the rig building business globally.

Keppel posted revenue of S$2.6 billion for the quarter ended June 30, down 19 percent from a year earlier, and a net profit of S$756.9 million for the first half of the year. That was slightly short of half of a mean estimate for the full year at S$1.59 billion, based on 21 analysts polled by Thomson Reuters.

Keppel’s offshore and marine division, which contributed 64 percent of the company’s revenue in 2014, was hit hard by sluggish oil prices and subsequent weak demand for drilling rigs.

The division’s pre-tax profit dropped by more than a third to S$221 million, and revenue declined 23 percent due to a lower volume of work and deferment of some projects, Keppel said in a statement.

Keppel posted a net order book at S$11 billion, down from S$11.3 billion at the end of March, but it reported two non-rig order wins this month which were worth a combined $769 million.

“The (marine and offshore) division will focus on niche markets in which there is still good demand,” said Keppel. ($1 = 1.3669 Singapore dollar) (Reporting by Rujun Shen; Editing by Anand Basu)